–
an entity required to be authorised or regulated to operate in the
financial markets. The following list includes all authorised entities
carrying out the characteristic activities of the entities mentioned,
whether authorised by an EEA State or a third country and whether or not
authorised by reference to a directive:

a credit institution

an investment firm

any other authorised or regulated financial institution

an insurance company

a collective investment scheme or the management company of such a scheme

a pension fund or the management company of a pension fund

a commodity or commodity derivatives dealer

a local firm

any other institutional investor

–
in relation to MiFID or equivalent third country business, a large
undertaking, meeting two of the following size requirements on a company
basis:

balance sheet total of EUR 20,000,000

net turnover of EUR 40,000,000

own funds of EUR 2,000,000

–
in relation to business that is neither MiFID or equivalent third
country business, a large undertaking meeting either of the following
conditions:

a
body corporate (including a limited liability partnership) which has
(or any of whose holding companies or subsidiaries has) called up share
capital of at least £10 million (or its equivalent in any other currency
at the relevant time);

a
large undertaking that meets (or any of whose holding companies or
subsidiaries meets) two of the following tests: (i) a balance sheet
total of EUR 12,500,000; (ii) a net turnover of EUR 25,000,000; (iii) an
average number of employees during the year of 250;

a
national or regional government, a public body that manages public
debt, a central bank, an international or supranational institution
(such as the World Bank, the IMF, the ECP, the EIB) or another similar
international organisation;

another
institutional investor whose main activity is to invest in financial
instruments (in relation to the firm's MiFID or equivalent third country
business) or designated investments (in relation to the firm's other
business). This includes entities dedicated to the securitisation of
assets or other financing transactions.

Lyxor
UCITS compliant Exchange Traded Funds (Lyxor UCITS ETFs) referred to on
this website are open ended mutual investment funds (i) established
under the French law and approved by theAutorité des Marchés Financiers (the French Financial Markets Authority), or (ii) established under the Luxembourg law and approved by the Commission de Surveillance du Secteur Financier (the Luxembourg Financial Supervisory Committee). Most, if not all, of the protections provided by theUK
regulatory system generally and for UK authorised funds do not apply to
these exchange traded funds (ETFs). In particular, investors should
note that holdings in this product will not be covered by the provisions
of the Financial Services Compensation Scheme, or by any similar scheme
in France.

This
website is exclusively intended for persons who are not "US persons",
as such term is defined in Regulation S or the US Securities Act 1933,
as amended, and who are not physically present in the US. This website
does not constitute an offer or an invitation to purchase any securities
in the United States or in any other jurisdiction in which such offer
or invitation is not authorised or to any person to whom it is unlawful
to make such offer or solicitation. Potential users of this website are
requested to inform themselves about and to observe any such
restrictions.

However,
most Lyxor UCITS ETFs follow synthetic replication process. This
consists of entering into a derivative transaction (a ‘Performance
Swap’, as defined below) with a counterparty that provides complete and
effective exposure to its benchmark index. Lyxor has adopted this
methodology in order to minimise tracking error, optimise transaction
costs and reduce operational risks.

A
Performance Swap is a contractual agreement which is negotiated
over-the-counter (OTC) between two parties: the Lyxor UCITS ETF and its
counterparty. From a risk perspective, each Performance Swap ranks
equally with other senior unsecured obligations of the counterparty,
such as common bonds (i.e., same rights to payments). In the Performance
Swap, the counterparty of the Lyxor UCITS ETF commits to pay the Lyxor
UCITS ETF a variable return based on a pre-determined benchmark index,
instead of a fixed stream of income (as in bonds). At the same time, the
counterparty will receive from the Lyxor UCITS ETF the performance and
any related revenues generated by the basket's assets (excluding the
value of the Performance Swap) held by the Lyxor UCITS ETF. Information
provided on individual ETFs includes data on the basket relating to the
ETF and the percentage value of the basket represented by each asset.
The information is relevant to the closing values on the date given.

Investment Risks

The
Lyxor UCITS ETFs described on this website are not suitable for
everyone. Investors' capital is at risk. Investors should not deal in
this product unless they understand, having obtained independent
professional advice where necessary, its nature, terms and conditions,
and the extent of their exposure to risk. The value of the product can
go down as well as up and can be subject to volatility due to factors
such as price changes in the underlying instrument and interest rates.
If a fund is quoted in a different currency to the index, currency risks
exist.

Prior
to any investment in any Lyxor UCITS ETF, you should make your own
appraisal of the risks from a financial, legal and tax perspective,
without relying exclusively on the information provided by us. We
recommend that you consult your own independent professional advisors
(including legal, tax, financial or accounting advisors, as
appropriate).

Specific Risks

Counterparty risk:

Through
Lyxor UCITS ETFs, investors are exposed to counterparty risk resulting
from the use of OTC swaps with Société Générale. Pursuant to the UCITS
Directive 2009/65/EC (as may be amended), the exposure of a UCITS to a
swap counterparty which is a credit institution for the purpose of the
Directive, cannot exceed 10% of the total fund assets. It is recommended
that potential investors study the fund prospectus before investing.

As of 1st January
2013, the long term, senior, unsecured debt obligations of Société
Générale were rated A by Standard and Poor’s Ratings Services (S&P)
and A2 by Moody’s Investor’s Services Inc (Moody’s). Companies are rated
by S&P from AAA (highest rating / most secure) to D (lowest rating /
in default / most risky), and by Moody’s from Aaa (highest rating /
most secure) to C (lowest rating / in default / most risky).

Liquidity risk:

Société
Générale is not the only market-maker for Lyxor UCITS ETFs. Société
Générale and any other market makers supporting Lyxor UCITS ETFs on
exchange must follow the respective London Stock Exchange (LSE)
requirements and guidelines. On-exchange liquidity may be limited as a
result of a suspension in the underlying market represented by the index
tracked by the ETF; a failure in the LSE, Société Générale or other
market-maker systems; or an abnormal trading situation or event.

The securities can be neither offered in nor transferred to the United States.

Tax

The
tax statement is only a general guide. The tax treatment of investments
will depend on an individual’s circumstances. If investors are in any
doubt as to their tax position, they must consult with an appropriate
professional tax adviser. This statement of the UK tax treatment of the
product is based on our understanding of the laws and practice in force
as of the date of this document and is subject to any changes in law and
the interpretation and application thereof, which changes could be made
with retroactive effect.

Further information on the risk factors are available in the Risk Warning section of the website.

Any fund prospectus and supplements are available at www.lyxoretf.co.uk.
Information given about the past performance of the funds is no
guarantee of future performance. No investment decision should be taken
without reading the fund prospectus and any fund supplement of the fund
concerned.

Although
the content of the website is based upon information that Lyxor UK and /
or Société Générale consider reliable or comes from sources that Lyxor
UK and / or Société Générale consider reliable, neither Lyxor UK nor
Société Générale have verified such information. Lyxor UK and Société
Générale make no representation or warranty as to the accuracy,
completeness or adequacy of any information. Any reproduction,
disclosure or dissemination of the materials available on the website is
prohibited.

I CONFIRM THAT I HAVE READ AND UNDERSTOOD THE IMPORTANT INFORMATION THAT IS CONTAINED ABOVE

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Les réponses aux questions les plus fréquemment

LYXOR ACADEMY

Welcome to Lyxor Academy. You will find a WIKI of all financial terms used within the website as well as a F.A.Q to answer all your questions.

WIKI

Find the definition of all technical and financial terms regarding ETFs.This WIKI will allow you to better apprehend all the information within the website and improve your knowledge of derivative products and ETFs in particular.

F.A.Q

Find here the answer of frequent asked questions on ETFs and Lyxor International Asset Management.

ACADEMY WIKI

Term

Active Fund

Annual Reports

Ask

AuM

Benchmark

Bid

Collective investment scheme

Commodities

Corporate Bonds

Coupons

Derivatives

Dividend Yield

Exchange Traded Fund (ETF)

Foreign Exchange (FX)

FSA

Futures

Active Fund

A
fund that aims to provide above-average performance by using human
judgement and/or quantitative tools to select and trade stocks and asset
classes. Active fund managers try to outperform indices or meet
specific total return targets. Index fund managers, by contrast, try to
match the performance of indices as closely as possible.

ACADEMY F.A.Q

Please find below the most frequently asked questions

An ETF is a fund. What is a fund? What is an ETF?

"A fund is a collective investment vehicle via which a professional asset manager manages the capital invested by an investor.
Exchange Traded Funds (ETFs) are investment funds that invest in transferable securities or UCITS* (Undertaking for Collective Investment in Transferable Securities) in the form of a mutual fund (FCP) or an open-ended investment company (SICAV). They are listed on a stock exchange and their investment objective is to reproduce the performance of a benchmark index, whether it moves upwards or downwards. This index may be exposed to stock markets, debt markets or commodity markets. ETFs have two main characteristics, namely they offer investors:
- access to a portfolio of diversified transferable securities;
- the security provided by the expertise of an asset management professional.
For more information, please refer to the ETF prospectus and the KIID on www.lyxoretf.com"

How do I know how much my Lyxor UCITS ETF is worth?

"Lyxor International Asset Management’s commitment to quality is at the heart of its services and know-how. As proof of this commitment, Lyxor International Asset Management established in 2011 a quality charter to ensure that all Lyxor UCITS ETFs comply with the highest standards in terms of performance, risk controls, liquidity and transparency.
In accordance with its values, Lyxor International Asset Management is committed to providing you with a client-friendly, comprehensive and efficient portfolio monitoring service.
Each ETF replicates on a daily basis upward and downward movements in its benchmark index.
If the CAC40 index gains 3%, the Lyxor UCITS ETF CAC 40 will appreciate by 3% at the same time; conversely, if the CAC 40 index loses 3%, the Lyxor UCITS ETF CAC 40 will depreciate by 3% over the same period. These variations are understood to be before fees, the applicable tax regime and/or investment related expenses (brokerage fees).
In a single transaction, and therefore for the cost of one stock market order, you diversify your portfolio and obtain a positive or negative performance that is identical to that of a direct investment in the basket of shares (bonds or other financial instruments) making up the replicated index.
Unlike a traditional tracker SICAV or FCP, Lyxor ETFs are traded continuously on a stock exchange. You can therefore buy or sell them at any time, at a known price, and thus benefit from movements in the index in real time.
ETFs are traded continuously on an exchange, as simply as shares.
Therefore, at all times, you know their value, you can buy or sell one or more ETFs (no minimum investment, they are traded by unit), place limit orders (to retain control over your buy or sell price). All you have to do is indicate the Mnemonic or ISIN code to your financial intermediary (bank, online broker, etc.).
One or more leading financial institutions, the market makers, undertake to provide bid and ask prices with narrow spreads for very large quantities throughout the trading day. Société Générale generally acts as market maker for Lyxor ETFs. You can be assured therefore that, under normal market conditions and subject to regularly functioning IT systems, you will be able to buy and sell your products when you want.
ETF prices are very easy to follow: they reflect in real time changes in the price of the underlying index, adjusted where applicable for a possible foreign exchange effect. Generally speaking, ETFs represent a fraction of the given index in euro. Example: the ETF represents 1/100th of the value of the index. In such a case, the ETF is worth 30 euros when the index price is 3,000 points. You can check Paris exchange traded prices via stock market information websites, in the financial press or by calling your financial intermediary."

What management strategies are possible with ETFs?

"Diversification and flexibility
Other than their simplicity, ETFs have many advantages which make them invaluable portfolio management tools. They enable investors to:
- gain exposure to the performance of a benchmark index,
- invest cash on a short-term basis pending a longer-term investment
- Enhance the efficiency of the management of their portfolio by limiting the costs generated and the time consumed in the management of baskets replicating a benchmark index.
Diversification: reduction of market risk
Lyxor UCITS ETFs offer investors exposure to broad indices or to small market segments. The indices are real benchmarks:
- the shares which are included in the major indices are those of the largest companies that are the most representative of their country or their sector;
- the possibilities offered in terms of index selection enable you to implement a real geographical and/or sector allocation of your portfolios.
The Lyxor UCITS ETF range offers a broad investment universe, on the main stock market capitalisations of a country (USA), a geographical area (eurozone, global) or a specific sector (small caps, etc.)."

What are the risks associated with such an investment?

"(i) Market risks: Each ETF reflects upward and downward movements in the price of its benchmark index. Investments in an ETF are therefore above all sensitive to the market risk associated with an adverse movement in the price of the components (shares, interest rates, credit, commodities, private equity, volatility, etc.) of the benchmark index, and therefore a drop in the said index.
(ii) Risk of loss of capital: as ETFs do not offer any capital guarantee, investors may be exposed to a significant loss and may even lose the full amount of their investment.
(iii) Currency risk: some underlying indices are denominated in a foreign currency and may therefore contain one or more components denominated in one or more foreign currencies. In such cases, the investment will be sensitive to positive or negative changes in the exchange rate between the said currency or currencies and the euro (in the case of an ETF priced in euro).
All these risk factors, where applicable, are explained in greater detail in the “Risk Factors” section of the prospectus available on this website. It is important to study these before investing. Potential investors should also familiarise themselves with the main characteristics of the underlying index (number and main securities, sector and/or geographical allocation, past trends, etc.) in order to have an overview of the opportunities and risks associated with an exposure to the index in question. A wide range of information is available, in particular in the technical information sheets (available on this website)."

Why choose a Lyxor UCITS ETF

"These products were first developed in the United States at the beginning of the 1990s and have been very successful on the US market since 1999. Lyxor International Asset Management, an asset management company that is part of the Société Générale group, launched the first Lyxor ETF listed on the Paris Stock Exchange in January 2001. Today Lyxor International Asset Management is still a leader on the ETF market and continues to develop effective and innovative products that are recognised by the market.
Lyxor UCITS ETFs are simple, liquid, transparent and effective investment products that combine the performance of a tracker fund and the return of a listed stock. The investment objective of each ETF is to reproduce the performance, whether positive or negative, of its benchmark index.
Lyxor UCITS ETFs enable you to:
- closely track upward and downward market movements;
- access a large choice of underlyings via a single stock market transaction;
- reduce risks via diversification.
All our Lyxor UCITS ETFs are managed by Lyxor International Asset Management, an asset management company registered in France and regulated by the French financial markets authority (AMF). Each of our funds complies with the European UCITS Directive and can therefore benefit from a passport (marketing authorisation valid throughout the European Economic Area as a UCITS) in accordance with the UCITS Directive."

What fees do I have to pay?

"Lyxor International Asset Management deducts management fees (TER)/per annum, charged every day against the fund’s net asset value. You therefore pay these fees for the period during which you hold units.
Unlike traditional UCITs, Lyxor does not charge either subscription or redemption fees when you trade on a stock exchange (for information, the amounts of the subscription fees indicated in the prospectus and the KIID, apply only to the primary market, that is to say for the creation or redemption of units where applications are submitted directly to the management company). As with any other stock market acquisition of transferable securities (shares, bonds, etc) you must pay the fees charged by your financial intermediary (brokerage, SRD deferred settlement fees and custodian fees). These fees are generally identical to those charged for transactions in French shares."

How do I place an order?

"How are they traded?
Lyxor UCITS ETFs are traded continuously on Euronext Paris and on other European stock exchanges.
They are traded on NYSE Euronext from 9:05 to 17:30 (closing price at 17:35), in the same way as any other security (share), without any minimum quotity (traded by unit). The fees charged by your bank or ebroker are the same as those charged for a transaction in a share listed on NYSE Euronext, irrespective of whether the ETF’s indexing is European, American, Asian or even global.
What is the procedure to be followed?
Place your order with your usual financial intermediary (bank branch, broker or ebroker), indicating the product code – ISIN code – the quantity of units and the price at which you want the trade to be executed. A simple securities account or a PEA or PEA-PME, depending on the fund’s eligibility, is all you need. As for any stock market investment, we recommend you to place a limit order in order to retain control over your buy or sell price. Unlike traditional SICAVs and FCPs, Lyxor UCITS ETFs do not charge either subscription or redemption fees if you trade them on a stock exchange. The annual management fees are deduced from the net asset value of each unit and are limited: as low as between 0.15% and 0.85% inclusive per annum. These management fees are directly charged against the net asset value of the Lyxor UCITS ETF. As for any stock market transaction, your intermediary will bill you for brokerage fees and custodian fees (generally identical to fees on French shares)."

Are there distributions?

Depending on their distribution policy, Lyxor UCITS ETFs may make one or more distributions a year. To consult the provisional distribution schedule, see the corresponding section on this website.

How are the distributions of a Lyxor UCITS ETF treated from a tax point of view?

"For retail investors residing in France, all dividends and other distributions received are subject to the progressive scale of income tax.
Amounts distributed by the fund to its unitholders retain their original nature."